CASE LAW

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TRUST PRIVATE LETTER RULING

 
 

IOWA COURT SAYS DISTRIBUTIONS HELD BY SPENDTHIFT TRUST ARE PROTECTED FROM CREDITORS

On August 31, 2022, the Iowa Court of Appeals held that a creditor cannot collect distributions from a spendthrift trust until the funds are in the beneficiary’s control. A creditor attempted to garnish funds of two spendthrift trusts which were being held by a trustee for the debtor’s benefit. The district court denied the debtor’s motion to quash the garnishment. Because the debtor had not yet received the distributions, the Court of Appeals reversed the district court’s order. 
 

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